INSIGHT

R&D Winery Tax Credits: What Qualifies and How to Claim Them 

James Elliott, Andre Shevchuck • November 5, 2025

Services: R&D Tax Credit Industries: Wine & Agribusiness

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Winery owners constantly innovate to improve their cultivation and fermentation processes. What many don’t realize is that these daily activities may qualify for valuable Research and Development (R&D) tax credits. Despite the significant financial benefits available, most wineries leave this money on the table simply because they don’t know their work qualifies.  

This article will explore what makes your winery eligible, which activities qualify, and how recent tax law changes make these credits even more valuable. 

Understanding R&D Tax Credits for Wineries 

R&D tax credits allow businesses to claim a dollar-for-dollar reduction in their tax liability for qualified research and development expenditures. These credits represent a significant financial advantage. You can reduce your tax bill and generate cash back for reinvestment in your operation. 

Companies of all sizes qualify for the federal R&D tax credit. Additionally, 70% of states now offer their own research and development tax credits. According to industry research, while more than 14,000 U.S. companies claim federal R&D credits annually, less than 33% of companies that actually qualify apply for them.  

What Qualifies as Research and Development? 

The tax definition of qualified research extends beyond traditional laboratory work. Companies that develop new or improved products, processes, or software for its operations may be eligible for the R&D tax credit. 

Your research must meet a 4 part test criteria at a “business component” or project level: 

• Technological in Nature: 
  The work must rely on principles of physical sciences, biological sciences, engineering, or computer science. 
• Permitted Purpose: 
  The activity must aim to create or improve a product, process, technique, invention, formula, or software in terms of performance, reliability, quality, or functionality. 
• Elimination of Uncertainty: 
  The activity must attempt to resolve uncertainty about how to develop or improve the product or process (uncertainty about capability, method, or design). 
• Process of Experimentation: 
  The activity must involve a process of evaluating alternatives through modeling, simulation, systematic trial and error, or other testing methods. 

The good news? Your project doesn’t have to succeed to qualify for the credit. 

Qualifying Activities for Wineries 

Wineries conduct research and development in various ways. New manufacturing processes qualify. Improvements to wine quality and taste may qualify. Developing new or improved beverages can potentially qualify for the R&D tax credit. 

Vineyard Optimization 

Your vineyard work may qualify when you evaluate soil conditions, water availability, and ground slopes to optimize grape cultivation. Developing soil and rootstock improvement processes counts. So does designing trellis improvements and developing plant irrigation systems. 

Production and Bottling Improvements 

You may qualify when you develop new or improved bottling and packaging processes. Testing new or improved corks qualifies. Developing improvements to bottle labeling materials counts. Evaluating varied filtration methods to prevent microbial spoilage and increase wine quality qualifies. Testing products to ensure shelf life also makes the list. 

Enhancing Your Production Mix 

Many qualifying activities happen during production. Evaluating conditions like humidity, lighting, ventilation, temperature, and barrel fermentation for wine production may qualify if it meets the 4 part test. Developing flavor or aroma profiles, improved ingredient mixing methodologies, and product prototype batches all may potentially qualify. 

You can claim credits for developing new or improved quality assurance testing processes. Testing products to ensure consistency qualifies. So does developing new or improved preservative chemicals. 

Economic Efficiency Research 

Improvements to the economic efficiency of your fermentation process qualify. Experimenting with equipment to improve both efficiency and precision during fermentation counts. Developing improved grape strains qualifies. Testing product ingredient mixtures for desired flavor or aroma profiles also makes the cut. 

Learn more about R&D Tax Credits

Recent Tax Law Changes: The One Big Beautiful Bill Act 

The tax landscape for R&D credits recently improved significantly. The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently restored immediate expensing for domestic research and experimental expenditures for tax years beginning after December 31, 2024. This reverses years of required capitalization and amortization that created cash flow challenges for innovative businesses. 

Small businesses with average annual gross receipts under $31 million can now amend prior year tax returns to expense domestic R&D costs retroactively back to 2022. This means you may be eligible for refunds on taxes you already paid. 

All taxpayers can elect to accelerate remaining unamortized domestic R&D expenses from 2022-2024, either in full in 2025 or split between 2025 and 2026. This creates immediate cash flow benefits for wineries that have been capitalizing these costs. 

The new law creates a clear incentive for domestic research. Foreign R&D expenses must still be amortized over 15 years, but domestic expenses can now be fully deducted in the year incurred. 

New Reporting Requirements 

Be aware that the IRS updated Form 6765 for 2025. Detailed project-level reporting is now mandatory for businesses with over $1.5 million in Qualified Research Expenses. You’ll need to track R&D projects and expenses more precisely than before. Higher audit risk exists if your documentation is incomplete or inconsistent. 

Work With BPM to Navigate R&D Tax Credits for Your Winery 

Navigating R&D tax credits requires specialized knowledge of IRS requirements and documentation standards. The recent changes under the One Big Beautiful Bill Act create new opportunities but also add complexity around elections, retroactive claims, and coordination with other tax provisions. 

BPM helps wineries identify qualifying activities, document research efforts properly, and maximize available credits while maintaining compliance with new reporting requirements. For a free assessment to determine your R&D tax credit eligibility and develop a strategy that puts cash back into your winery, contact us.